The issue
of how to avoid having to pay top-dollar fees for commoditised legal work has
been an issue of concern for clients for some years now. Although lawyers can and do often stress the
benefits of having highly qualified experts dealing with a case, the reality is
that in many areas of law and commerce a lot of the more straight-forward work
which has traditionally been done by lawyers can be done more cheaply and more
efficiently elsewhere. Why pay £300 per
hour for a junior lawyer in a private firm to draft something that can be
provided much more cheaply through competent technicians in low cost locations?
CPA was one of the first companies to recognise that large clients might want
to insist on some of their legal work being outsourced by their lawyers to
cheaper providers, and made a significant fortune out of that market. Carillion, the FTSE 250 construction group,
was one of the early adopters of CPA’s services and encouraged Carillion’s legal
panel members to use CPA in order to achieve cost savings.
However, Carillion,
has now gone much further than this, and has taken its own interesting hybrid
approach to the issue. Firstly, it has
in-sourced a lot of its routine legal work setting up its own Carillion
Advisory Services with 60 paralegals doing much of the relatively standardised work
on Carillion’s own business needs. That
in itself is nothing unusual – plenty of large businesses have their own in
house legal department - but CAS is also
offering legal aid advice to third party clients, and Carillion is now
requiring the 12 law firms on its panel of advisors to use CAS for the commoditised
elements of the work they are undertaking for the group, in order to minimise
costs.
And in a
step further still, it is being reported that at least one of the panel firms,
Clarkslegal, is now offering CAS services to some of its other clients as a
lower cost resource. So
essentially, Carillion has spawned its own legal services outsourcing business,
which will now have a wide range of third party clients, as well as handling
the company’s own basic legal needs.
At present, the business is not offering legal services which are regulated,
but this is not ruled out for the future.
This would see CAS converted into an alternative business structure
(ABS).
From my
perspective, I think that in having its own in-house team of legal executives,
Carillion will probably be able to drive efficiency savings for itself and for
third parties to which it offers similar services. A lot of construction and property related
work is relatively commoditised and lends itself well to this approach. Furthermore, as Carillion’s 12 firm panel of Carillion
legal advisers includes some big hitters, including Slaughter and May,
Linklaters, Ashurst, Addleshaw Goddard, DLA Piper and Pinsent Masons, CAS
should get its venture off to a flying start by effectively requiring them to
unbundle their work and refer some of it to CAS. Who knows where this could lead if CAS proves
itself adept at working the model.
For me, the
only slightly discordant note in the offering is the legal aid services, which
seem to be to be a very different kettle of fish from commercial advice and
document preparation. I suspect that
this offering is more a hangover from the development roots of the CAS team
(which became part of the Carillion Group through acquisition) rather than a
cue to its future direction.
This is a really excellent read for me.This is definitely something people need to be up on. Really very useful post Thanks ..
ReplyDeleteSourcing Services
Thanks for such an interesting post here. I was searching for something like that for quite a long time and at last I have found it here.
ReplyDeleteMatthew Browndorf Lawsuit